Xbox studios Compulsion, Double Fine and Ninja Theory face closure

Multiple Xbox first‑party studios are in active negotiations to spin off from Microsoft in an effort to avoid outright closure, Bloomberg’s Jason Schreier reports [1]. The studios named—Compulsion Games, Double Fine and Ninja Theory—have been told their fate is “in flux” and employees have been given permission to seek new work while discussions continue [1].

The talks come amid a broader “Xbox Reset” announced by Xbox chief Asha Sharma, who warned that the division must become more profitable after a five‑year revenue drop of nearly $500 million and a four‑fold rise in hardware costs [1]. The reset follows a series of cost‑cutting moves, including 1,900 staff reductions across Activision Blizzard, Bethesda and Xbox in 2023‑24, and a previous 9,000‑job layoff wave last summer [1].

Ninja Theory, fresh from unveiling its new Hellblade project Senua at the Xbox Games Showcase, is reportedly the most visible of the three, with staff informed the studio will close unless a buyer is found [4]. Double Fine and Compulsion are pursuing similar buy‑back options, hoping to regain independence and keep upcoming titles like Double Fine’s Kiln and Compulsion’s South of Midnight alive [1][3].

If the spin‑offs succeed, the studios could continue developing games, but many employees may still lose jobs, and the future of projects such as Senua remains uncertain. The outcome will test Microsoft’s ability to streamline its first‑party portfolio while preserving the creative output that justified its earlier acquisitions.

The real question now is whether Microsoft will allow these studios to break away and survive, or whether the cost‑cutting drive will force their complete shutdown, reshaping Xbox’s lineup of original titles.